Small Business Loans

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Business loans are a dime a dozen and for each varying type of finance available to small businesses, there are varying requirements as well. Many small businesses cannot see the light of day if not for financial assistance from a third party and fortunately due to the worldwide effort to boost job creation and encourage entrepreneurship, finance for small business ventures are readily available and accessible from various sources

Business Loan

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As an up-and-coming business owner however, you will need to investigate your specific business requirements before making any kind of decision on finance. Think about the following:

What do you need to get your business going?

How much will this cost you?

What amount will you be able to cover in your own capacity?

Do you need a business loan for the full amount?

Does your workable budget allow for loan repayments? Remember to consider interest rates when working this out.

Once you’ve analysed your needs, you can then go on to consider the various options you have with regard to business loans. Your options will include bridging finance, asset finance, revolving credit, venture capital or a term loan.

How To Secure A Loan

Requirements for loans vary upon the type of loan you are requesting. Consider the following:

Venture capital: Requirements depend largely upon the investor in these instances. Most commonly, business owners are required to provide a good business plan, full financial projections and forecast as well as stakes that make the investment worthwhile. These will include things like shares in the business and profit percentage.

Term loan: A small business loan requires the presentation of a good business plan that outlines the nature of your business, how much funding you need, what you intend using the funding for as well as financial forecasts and projections. You will most likely be requested to provide some kind of collateral against the loan amount to act as security for the lender.

Revolving credit: This type of loan works by means of borrowing a certain amount of money and then having that same amount available to you once you’ve repaid the initial loan. Lenders in these instances most commonly ask for in depth financial statements, projections and evidence of cash flow on a regular basis.

When it comes to business finance, you should be prepared to fulfil basic requirements like having a business plan in place, clear credit record and good credit rating, collateral and the means to prove affordability. This can be achieved through presenting financial statements and performance records of your business, whether actual or projected.

Finding A Loan

You can get finance for your business from a bank, financial institution, venture capitalists, private lenders or government programs that encourage and support entrepreneurship.

Use online resources or networking to make contact with a provider you feel suits your business requirements best and then work from there. Consider things like repayment options and interest rates when making your decision. Keep in mind that business loans often seem like an uphill battle but if you have your ducks in a row, you could have your business running at full steam in no time.

Small Enterprise Finance Agency (Sefa) Small Business Loans

With grate news and enthusiasm for Small Business owners and entrepreneurs looking for small business loans it was reported in the local newspaper that the following various spheres of government and their agencies would work together to fast track job creation and grow the economy .Minister Ebrahim Patel announced a major deal with China , an expanded mandate for the Industrial Development Corporation (IDC) including the launch of a new subsidiary –The Small Enterprise Finance Agency (Sefa) , which will focus on providing small businesses loans

Finance Loans

.He reported the agency would have in the region of R2 billion in the lending kitty provided by fiscal transfers and reserves and just short of a R1 billion Rand shareholder loan from the IDC . In addition , the IDC had issued a R4 billion Rand jobs bond to promote lending to companies in a bid to boost job creation .It

Was reported that Sefa would use the national footprint of the S A Post Office to conduct its business through Postbank . The Sefa Small business loans provided would be up to an initial threshold of 3 Million , as part of the state support initiative for small businesses , some 100 accountants would be made available by the South African Institute of Chartered Accountants to small businesses and black owned enterprises . They would either work directly with the businesses or be a part of two hubs – one in Pretoria and another in Bloemfontein to be tapped into by small businesses.

SEFA – Small Enterprise Finance Agencyis a new funding option for aspiring business owners. An agency owned by the IDC or Industrial Development Corporation, the main focus of SEFA is to provide finance of up to R3-million to small businesses to boost job creation and further grow entrepreneurship in the country. It makes use of banks, financial institutions and direct lending to do this

Small Business Enterprise

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An important feature that sets SEFA apart from other lenders is that it works to break the current pattern of big businesses in major contracts. It will work to include small businesses in this monopoly by giving them access to bigger contracts where their expertise can be used. This is a wonderful opportunity for small up-and-coming businesses to get a foot in and create a niche for themselves in a competitive market.

Ways in which SEFA – Small Enterprise Finance Agency aims to create a better footing for small businesses include the following:

Making access to much-needed funding easier to small businesses who have been denied this by bigger lending institutions due to certain risk factors

Giving them access to big contracts that were previously exclusively given to established businesses

Encouraging large firms to act as mentor to smaller businesses

Creating mutually beneficial partnership between big and small businesses with regard to inclusion in supply chains and the like

Focus on establishing entrepreneurship in sectors that require growth like mining, tourism, infrastructure support and green economy

Financing options offered by the agency include:

Bridging finance

Revolving loans

Asset finance

Working capital

Term loans

How To Secure Funding

The main service of SEFA will be to make business finance available to small businesses who have struggled to receive this funding elsewhere. The agency is willing to overlook certain risk factors in an effort to boost entrepreneurship and job creation. However, funding will not be haphazard or cheap.

For instance, interest rates will be calculated according to the risk factor presented by the business. On average, interest will be prime plus 3-5% and then adjusted depending on how risky the venture is. You will have to do the following to secure a loan:

Set up some time to meet with SEFA

Have a good business plan to present. Your business plan must outline what your business is, how much funding you will require and what you will be using that funding for. You must also include financial forecasts and projections so that the viability of your business can be properly analysed.

During your application process, SEFA will analyse your business proposal and decide whether your business can afford to repay the requested finance out of its cash flow over a specific time period.

The nature of your business will also play a great role in the application process because SEFA specifically wants to focus on smaller businesses that cater to gaps in the market. Your chances are therefore better with SEFA – Small Enterprise Finance Agency if you can prove that your business is providing a much-needed service or product in an under-developed sector.